Order up

To experience what could be the future of dining, just sit down at a Chili’s restaurant. A 7-inch touch-screen tablet on your table displays desserts, drinks, and appetizers.

You can read USA Today via an app for free, or play Bejeweled 2 or Plants vs. Zombies for $1.99. After your meal, you can order cheesecake with the tap of an index finger, and there’s no need to wait for a server to take your credit card: One swipe on the tablet, a quick signature, and your bill is paid and receipt printed from the bottom of the device.

Chili’s Grill & Bar is one of several restaurants—Applebee’s, Panera Bread, and Abuelo’s are others—that are adopting tablets and kiosks to increase employee efficiency, streamline customer service, and boost revenue.

Chivonne Ewing, a Chili’s waitress, said the devices raise her tips and help her turn around tables faster. Parents often buy the games for kids, she said, and even adults in the bar play on the tablets.

The new devices come to restaurants at a time when the industry is coping with rising food costs and trying to attract customers who have little disposable income. Plus restaurants face the prospect of another mushrooming expense: minimum wages. As hourly wages go up, some people speculate restaurants—the top employers of minimum-wage workers—will use technology to reduce employee hours or cut jobs altogether.

The Obama administration wants to raise the federal minimum wage to $10.10 per hour from the current rate of $7.25, a plan Congress has opposed. More than half the states have their own minimum wages set higher than the federal minimum: In referendums this November voters in Alaska, Arkansas, Nebraska, and South Dakota chose to raise their state minimum wage to as much as $9.75. Seattle will incrementally raise its citywide minimum wage to $15 between now and 2021.

Nearly half of U.S. hourly workers who earned the federal minimum wage (or less, before tips) in 2013 worked in the food preparation and serving industry. Restaurants depend on low-paid and sometimes low-skilled workers to stay in business. Most restaurants in the current economy are earning profits of just 3 to 5 percent, and some are losing money, according to Darren Tristano, an executive vice president at Technomic, a restaurant consulting firm. Tristano said a minimum wage increase to $13 per hour—a hike the city of Chicago approved in December—could destroy profits for many food establishments: “What that will do is likely cause several of [those] restaurants to close, feeding into further unemployment.”

Restaurants also may look to technology, a more cost-effective option as labor expenses rise. “It is a lot less expensive to have the customer place their order themselves,” said Michael Saltsman, the research director at the Employment Policies Institute, which opposes high minimum wages.

Last fall a few hundred workers from McDonald’s and other fast-food establishments went on strike to demand $15 an hour. Such demands could backfire in the long run. A Congressional Budget Office report last year determined a federal minimum wage hike to $10.10 would reduce total employment by 500,000 workers. And only a fifth of the increased wages would go to families below the poverty threshold. (Many low-wage earners actually live in middle-class families.)

Meanwhile, McDonald’s has joined the self-order game, at least in Europe, where it has installed kiosks inside its restaurants—although a company executive claimed the technology wouldn’t reduce overall McDonald’s staff.

Chili’s, likewise, insists its tablets aren’t intended to replace servers and haven’t reduced labor costs. Yet it’s clear tablets and kiosks can reduce workload. They allow servers to spend less time handling desserts and payments, and allow customers to skip order lines.

Better efficiency doesn’t necessarily mean someone’s job or hours will be cut: If tablets and kiosks help increase customers and sales, employees will have plenty of work to do, and restaurants plenty of revenue to pay them.

But what if minimum wages increase suddenly and steeply, and customers do not? If a restaurant has to choose between a full-time server and a tablet, between a kiosk and a cashier, the technology may be the less expensive option.

“The desire to reduce labor costs is a strong driver for most brands to adapt and incorporate technology,” said Tristano. “And technology gets cheaper every day.”

How mandatory wage hikes hurt nonprofits

Minimum wage hikes don’t affect just for-profit enterprises. In Hillsdale, Mich., a minimum wage increase forced a nonprofit restaurant that hired former drug and alcohol addicts to close its doors Sept. 28. The state’s minimum wage rose 75 cents last September (on Labor Day), to $8.15 per hour, and will rise another $1.10 by 2018.

“Prices and food have taken a hike all the way around,” says Jack Mosley, the executive director of Life Challenge of Michigan, which operated the restaurant, called Tastes of Life. Life Challenge runs a faith-based, 12-month residency program for men recovering from addictions, and its restaurant hired some of the men as dishwashers, prep cooks, and servers, while also employing women in need from the community: “Teaching them life skills. Teaching them how to work.”

To stay in business, said Mosley, Tastes of Life would have needed to raise menu prices 40 percent. Now his organization plans to turn the restaurant into a catering business and a women’s dormitory.

Five hundred miles west, in Des Moines, Iowa, Mark Nelson steps into a small coffee shop and scoops a handful of pale green beans from a hefty burlap sack. “This is what uncooked coffee looks like,” he says. The beans—shipped from Colombia, Costa Rica, Guatemala, or Brazil—will turn brown inside a red, refrigerator-sized roaster, then will be packaged for retail sale.

Nelson is the executive director of Freedom for Youth Ministries, a Christian nonprofit that provides transitional housing and minimum- or low-wage jobs for homeless young adults. “For our young people, most of them coming out of homeless situations, coming out of the chaos of the inner city, they have not seen a good work ethic modeled,” says Nelson. “We’re trying to train them to be good employees. … They’re learning how to roast the coffee, they’re packing it, selling it to churches and individuals and businesses.”

Nelson views minimum wage ($7.25 per hour in Iowa) as a “starting point” for employees: “That is where you prove yourself to your employer that you are an asset to the company.”

Freedom for Youth’s goal is to convert a vacant car wash next door into a large coffee shop and hire 30 to 50 teens and young adults. “We want to teach them, through this coffee shop, how to show up on time, how to be courteous to customers, how to respect authority—your boss. How to always go the extra mile,” says Nelson. “Those things that will provide them a solid career path in the future so they can break this poverty cycle they’re stuck in.” —D.J.D.